Monday, November 05, 2018

The Road to Perdition Is Neither Long Nor Winding for Republican Economists

by Neil H. Buchanan

As we wait to find out whether tomorrow's midterms will be the last meaningful election in American history, I will take a few moments here to consider a recent Republican absurdity that was drowned out by Donald Trump's cacophony of hatred and lies. In one way, it is fully consistent with Trump's tactics, because it is merely another attempt to scare people by shouting "Socialism!!" Given that the story comes from Trump's economists, however, this one is up my
alley and -- viewed from the proper perspective -- very, very funny.

The Council of Economic Advisers (CEA) was created after World War II (and thus less than a decade after the end of the Great Depression) to provide in-house expertise to the president when making economic decisions. Over the years, it became a resume must-have for economists who wanted to be in the big time, and being the chairperson -- "the President's chief economist" -- was naturally a plum job.

It was also mostly a boring job, but in the way that economists love. Because the CEA speaks for a president, however, it is undeniably a political job. Even so, the main job of the CEA was to produce the annual Economic Report of the President, which provided a bevy of economic statistics preceded by the best techno-political written case that the president's economists could offer to tout his performance in office and to support his policy proposals going forward.

Naturally, things would be different under Trump, because technical expertise is no longer a Republican thing. (See, e.g., change, climate.) And, boy oh boy, did Trump's group deliver. Just over a week ago, they produced a report discussing the perils of socialism. And socialism is apparently quite perilous indeed, so perilous that people need to read the word over and over again. As The New York Times's news analysis article describing the report noted, the word "socialism" appears 144 times, an average of twice per page.

The report is the usual insane, right-wing ranting, sweeping China, Cuba, the Soviet Union, and especially Venezuela into the same category as the Scandinavian social democracies. Again, this is nothing new for Republicans, but remember that this is from the Council of Economic Advisors, not the Republican National Committee or the Northwestern Ohio Tea Party Patriots.

In one footnote, the report says: "'Speculators' are also blamed for high prices and other social problems,
as by Marx, Stalin, Senator Sanders, Senator Warren, and Fidel Castro,
who said that they 'have turned the planet into a giant casino.'" Roy Cohn tactics, to be sure. But by far the most memorably McCarthyite line is this:

"Modern journalists and analysts routinely claim that single-payer
programs are more efficient—and thus are similar in spirit to Lenin and
Mao, who justified government takeovers on the basis of the virtues of
single-payer programs."

As the kids say: Wow. Just wow. But what makes this especially bizarre is actually not the McCarthyism, because that is what Republicans do.

No, the extra level of bizarreness is in the claim that what makes someone a fifth columnist is a desire to be "efficient." Conservative economists, after all, are the very same people who mock anyone who thinks that the economy should be designed with anything other than efficiency in mind, and who think that liberals' calls for "equity" are a Communist plot. But they are now actually saying that people who want, say, the health care system not to be wasteful are "similar in spirit to Lenin and Mao." Again, wow.

There has, unsurprisingly, been a good bit of ridicule of the report. The Times piece to which I linked above was refreshingly brutal rather than trying to engage in the "both sides have a point" style of journalism. Paul Krugman wrote a good column about it, although he focused mostly on refuting the CEA's claim that the Nordic countries are economic disasters. (They are most definitely not.) Sarah Kliff, who was one of the "modern journalists and analysts" that the CEA cited in the footnote to their "similar in spirit" smear, wrote a brilliant response on Vox.

There is thus nothing more to say about the report itself, mostly because it is a self-negating joke. The question is how the CEA ended up deciding to produce it in the first place. Although the internal negotiations that led to this farcical result are unknown, it is useful to understand that the economists who have long supported Republican candidates have always been motivated by their political priors and not by the rigors of economic theory. The theory is merely a prop to support their political goals.

I say this because, even though modern economics is deeply rigged to produce conservative results, it is perfectly possible for a Paul Krugman, or a Joseph Stiglitz, or an Uwe Reinhardt, or a Robert Solow, or a Joel Slemrod to be an economist in good standing yet still reach conclusions using standard conservative-biased economic methods that support Democrats' policy preferences. Republican-aligned economists pretend that their opponents are mangling the economics, but all the non-conservatives are doing is taking seriously the conservative claim that economic theory is not a normative enterprise. That claim is tendentious, of course, because the theory itself is built on normative assumptions. But even so, it is possible to be an insider in the economics game and reach non-conservative results.

The standard-issue economist on the Republican side has adopted the pose of a neutral analyst who is merely trying to explain to the unwashed masses the revealed truth about, say, the wisdom of Republicans' regressive tax cuts. (Why? Because those tax cuts are supposedly efficient. Again, that now apparently means that Republicans' tax policy is "similar in spirit to Lenin and Mao." Yeesh.)

Because Republican-aligned economists are Republicans first and economists second, they learn their non-economic dogma from their ideological allies. People like Chief Justice Roberts embarrass themselves when they try to talk about economics, because they merely repeat what they hear from their friends about "fiscal cliffs" and tax cuts. Similarly, right-wing economists are right-wing economists, and they have nothing new or useful to say about political issues. If their buddies are upset about Elizabeth Warren and Denmark, then they too will be upset about Elizabeth Warren and Denmark. (To be clear, I also have leveled this charge against left-leaning economists who try to "commit politics," sometimes with ridiculous results.)

To a certain extent, however, I am overstating the case against conservative economists. After all, almost all of the group that worked for McCain in 2008 and Romney in 2012 and that fought tooth and nail against fiscal stimulus after the Great Recession has been notably absent in the Trump Administration. Just as almost all right-wing foreign policy experts shunned Trump, so most of the biggest names in conservative economics have been invisible. There is a reason, after all, that Trump could not find any notable economists to defend his trade policies.

Although conservative economists have been merely posing as neutral scientists while pursuing a political agenda, therefore, many of them drew the line with Trump. But not all of them. It was initially a bit surprising that Trump managed to hire Kevin Hassett to be the chair of the CEA, because Hassett had been a major player in more mainstream Republican politics (advising Mitt Romney's failed 2012 presidential campaign, for example). But it is no mistake that Hassett is the man behind this Bernie = Fidel smear job.

Hassett is the example par excellence of a right-wing economist who is a right-winger first, last, and always. In 2014, when Thomas Piketty’s book decrying inequality became a best seller, Hassett appeared at an event at a D.C. think-tank to discuss the book. As I wrote at the time, Hassett was more than happy to red-bait Piketty. Hassett's economic claims were unsurprisingly dishonest, especially his claim that inequality was not so bad in the U.S. because we mitigate it with Medicare and Social Security. As Piketty quickly pointed out, the people whom Hassett supports would love to end both of those programs.

But it was when he tried to commit politics that Hassett revealed his inner hackishness. Hassett informed his audience that the famous conservative economist Joseph Schumpeter

"argued that the academy would become the focal point of opposition to
capitalism and would subsequently breed an intellectual elite that would
control the media, and ultimately politicians themselves. The academy
would reflexively hate capitalism because it is the job of the
intellectual to criticize, and because academics detest people who
actually accomplish something. Professors would envy the wealthy, and
feel themselves more worthy."

How much more perfectly could Hassett have hit all of the big themes of right-wing punditry? Elite professors would lead the opposition to capitalism itself and create intellectuals who will run the media and the world, all because they love to criticize things and because they envy the wealthy who actually accomplish something. All he had to do was say "Fake News!" and he could have been Trump before Trump.

A few years before that event, I attended a seminar where an economist who had served in George W. Bush's White House was presenting a paper. The author argued that Medicare and Social Security had to be cut back in order to reduce future deficits, but the moderator pointed out that the author had served in a White House that had created the Medicare drug benefit without providing any new sources of funds. In other words, they had massively increased deficit spending going forward.

Momentarily taken aback, the author admitted that he had hoped for a funding mechanism when the bill was being debated. Quickly remembering himself, however, he then committed politics by announcing with great certitude that "if we had provided the funding, Congress surely would have wasted it on something else, anyway." "Starve the beast" is the last refuge of the conservative economic scoundrel.

Again, nearly all economists -- and especially conservative economists -- claim to be objective analysts who can separate politics from "pure" economic analysis. But conservative economists' political beliefs put them only a few steps away from being able to lump Norway with Cuba and Elizabeth Warren with Vladimir Lenin. They were already most of the way down that road, and although some have rightly rejected Trump, they did so only out of some basic core of remaining decency. The others were merely waiting for Trump to bring their beliefs into full view.

1 comment:

I feel like a more interesting theme would have been the general tension between Trump's populist brand, which, whether Trump has gone here yet or not, tends to like inflationary policies such as deficits, stimulus, and low interest rates, vs. traditional conservatives like Romney and McCain, who hate inflationary practices. Why has Trump apparently given over his economics panel to the traditionalists? Or is focusing his economics on an attack of "socialism" Trump's way of pretending there isn't a gap and unifying Republicans?

I also feel like it would be helpful if economists would more often say frankly what seems to me to be the clear case: Traditional Republican deficit-hawking is about protecting the wealth of wealthy Americans (e.g., those with large holdings of US Treasuries) against inflation, and inflationary practices favor wages and income over accumulated wealth. (This is within usual variances; at extremes, both are devastating.) Perhaps I am wrong in this, as I am not an economist, but it certainly seems clear to me. It only gets murky because corporations, the other repository of wealthy Americans' wealth, also tend to do well under inflationary practices. Or maybe economists don't mention it because it is too obvious to them to be worth mentioning?